Betting big on online-to-offline commerce, Paytm acquires service marketplace


Indian online retail biggies are now looking at how to profit from India’s extensive network of brick and mortar stores. In yet another indication of this move, Paytm has acquired app-based marketplace for local services,

The acquisition will strengthen Paytm’s position in the burgeoning hyperlocal segment. The Alibaba-backed company identified hyperlocal commerce as an engine of growth and led a $50 million round in hyperlocal deal hunting app Little in July. The online-to-offline or O2O approach allows Internet retailers to partner with offline firms to give shoppers better service.

“We see enormous potential for O2O in India and acquired to strengthen our O2O initiative. Paytm will continue to invest more in this space which is a key focus area for us,” said Kiran Vasireddy, Senior Vice-President and head of investments for Paytm. According to media reports the deal was valued between $1.5 and $2 million (BACKLINK TO THE REPORT). Both Paytm and Near declined to reveal deal details.

Launched by Sunil Goyal, Lomesh Dutta and Akshay Khanna in July 2014, Near had secured Rs 1.8 crore in a seed round led by investors including Manish Vij, Anupam Mittal and several others. The company’s app lets people search for local services, and helps them connect with service providers and professionals. Currently, it’s operational in four cities—Delhi, Gurgaon, Bengaluru and Mumbai.

Importantly, the app follows hyper-curation approach and focuses on personal services instead of business listings. Earlier this year Paytm had also pumped in $2.5 million in Chandigarh-based autorickshaw hailing platform, Jugnoo. Besides offering rides, Jugnoo also does hyperlocal B2B deliveries leveraging its network of autorickshaws in multiple cities.

Noida-based Paytm has raised $700 million from Alibaba in two tranches this year. Alibaba, with a reported 40 per cent stake, is the single largest stakeholder in One97 Communication, Paytm’s parent. Paytm also counts SAIF Partners, Sapphire Venture and Silicon Valley Bank as investors on its board. Besides recharge and mobile wallet, Paytm operates mobile-only marketplace across categories like fashion, electronics, bus ticketing and hotel booking.

Indian e-commerce majors are following Alibaba’s business model and the latter has been building significant presence in the Chinese O2O space. Earlier this year, Alibaba and its affiliate, Ant Financial, pumped in nearly $1 million into a joint venture called Koubei that connects local food merchants to consumers.

Snapdeal, another Alibaba-backed company, is also pursuing O2O space aggressively and launched omni-channel platform Janus with retailers like Shopper's Stop and The Mobile Store across 70 cities. It is also piloting Snapdeal Instant to deliver orders within two hours by tying up with offline retailers.

YourStory take

The large e-commerce players using their financial muscle and technology prowess to work with offline stores will lead to bigger and better opportunities for the latter. It is estimated that there are 12 million kirana stores in India—a ready network of small warehouses for these e-commerce players. However, a number of players, big and small, have entered this segment of connecting local stores with online and app-based shoppers. Apart from biggies like Snapdeal, Paytm and Amazon, young players like Little and Goodbox are also operating this this fledgling segment. Is there space for all? We are definitely set to see more acquisitions.


Updates from around the world